Assignment Code: IBO-05/TMA/2021-2022

Course Code: IBO-05

Assignment Name: International Marketing Logistics

Year: 2021-2022

Verification Status: Verified by Professor

Attempt all the questions:

Q1. (a) What are the various factors taken into consideration while selecting the mode

of transportation for export cargo. Explain.

Ans) Moving items is a pain. Everything from packaging to shipment must be carefully planned. One error can result in lost or destroyed products. But we can assist! Here are the top 7 variables to consider when choosing a form of transport for your goods.

1. Cost of Shipping and Transportation

The cost of transportation is a major consideration when choosing a mode. It influences the entire product pricing. So, before you choose a form of transport, evaluate all costs.

Air transport is quick yet expensive. In such cases, rail travel is preferable. Water travel is cheapest yet takes the longest. But occasionally there is more than one mode of transit. For rail shipment, the products must be transported to the exact spot through road. If your items require such a combination of conveyance, you must first calculate the whole cost.

2. Safety of Goods

You don't want your products harmed during shipment, regardless of mode. So, cargo security is an important issue in deciding transit mode. Rail and maritime transport are more prone to damage or loss. Land transport is the safest option when sending products or fragile objects.

Your items' safety is also dependent on the transit firm. Damage-free delivery requires good package cushioning and good drivers. Adelaide trucking businesses give superior transport services. They make sure nothing breaks in transit. Choosing one of them may be a decent alternative for local transit in Adelaide.

3. Time or Speed of Transportation

The timing is a major factor in choosing a form of goods movement. Urgent delivery sometimes overcomes cost. Most importantly, you must strike a balance between travel time and cost

Air travel is the quickest. Rail is another option when time is critical. But rail transit works best where there are railroads. Otherwise, roads or water transit are suitable, albeit both take time.

4. Type of Goods to be Transported

The size and weight of the items play a part in determining which conveyance to utilise for transportation. Transport by air and land is better for smaller items. Larger items should be sent by rail or sea. The form of transport also relies on the items' fragility and worth. Transporting fragile objects by land or air is recommended. Perishable items require air shipment, especially if far.

5. Reliability/ Regularity of the Means of Transport

Weather affects air and sea transit more than rail and road. So, if you need regular shipments, the latter two may be best. Often, there will be multiple modes of transport. Airports, railway stations, and dockyards are crucial. In such cases, smooth transitions between transit modes are required.

6. Goods Carrying Capacity

The mode of transport's cargo carrying capability is also essential. Most road vehicles are small and cannot carry large loads. So, you will have to pay for many vehicles. Quantity is rarely an issue with air, rail, or marine transport. These forms of transport can easily convey large vessels and large quantities of commodities.

7. Carbon Emissions or Fuel Efficiency

While environmental awareness may not be a priority when contemplating transit, it should be considered. Regrettably, most modes of transport are harmful but there are other options. Electric trucks and fuel-efficient small cars are gaining popularity. You can use them if your transit needs are minimal. Finding transport businesses that provide such cars may be tough.

Conclusion

These are the top seven variables to consider when choosing a mode of transport. Pick a firm that offers your preferred transit option at a fair price. Let us know if you have any transportation questions and how you chose the best transit for your things.

Q1. (b) Describe the responsibilities of ship owners and the charterers under different forms of chartering arrangements. (10+10)

Ans) It is worth noting initially that the Shipowners Duties are the Charterers’ Rights, the various duties of the Shipowners can be summarised as follows:  To provide a seaworthy ship which complies with the charterparty description; To load properly and carefully, handle, stow, carry, keep, care for, discharge and deliver the cargo; To comply with charterers’ legitimate employment instructions; To prosecute voyages with reasonable dispatch

The Duty to Provide a Seaworthy Ship:

Most charter contracts specify that the ship must be seaworthy. A notable example is clause 1 of ASBATANKVOY which states that “...being seaworthy and having all pipes, pumps, and heater coils in good working order...”

Other clauses in the charterparties may not specifically specify seaworthiness but have the same impact. For example, BPTIME 2.1 stipulates that “the vessel shall be tight, staunch, and strong upon delivery...”

Even if no clear seaworthiness clause is present, the requirement to supply a seaworthy ship is assumed.

“The shipowner is, by nature of the contract, impliedly and necessarily held to warrant that the ship is good and is in a condition to perform the voyage then about to be undertaken,” stated Kopitoff v Wilson (1876) 1 QBD 602.

It is also stated in the UAE Maritime Law, Article 227, Section 2 of Chartering the Vessel for a Voyage, which states: “The despondent owner must put the vessel at the charterer's disposal at the time and place agreed in a seaworthy condition and properly equipped to carry out the voyage or voyages specified in the charter-party, and he must keep the vessel in such condition throughout.

Section 3 “Time Charter” and Section 4 “Bareboat Charter” of the same statute, offered the identical wordings.

According to Article 272 (1) of the said law, the carrier must put the vessel in a seaworthy condition, fit it out, man it, and provision it properly before setting sail and upon the commencement of each voyage. His task is to prepare the vessel's holds, cool rooms, and other areas to receive and store cargo.

Q2. (a) Discuss briefly the various constraints faced by Indian shipping industry.

Ans) Some of the constraints faced by Indian shipping industry are:

1. Low Capital Base: Most shipping businesses have a modest starting capital and only operate with one or two ships, which limits their capacity to compete.

2. Ship Finance: Shipping necessitates substantial funding at all phases of its life cycle, including acquisition, maintenance, operations, growth, and replacement. Due to the lack of available loans and the complications required in acquiring financing from other sources, shippers have struggled with these factors.

3. Growing Competition from Foreign Flag Ships: In the freight carrier area, ships from open registration countries pose a serious threat to Indian maritime industry.

4. Outdated Cost-Plus Formula: In the context of Indian shipping, the cost-plus formula is unfavourable to shippers that have purchased new ships or increased their existing fleet.

5. Non-uniform Taxation Policy: Foreign ships (with import cargo) are not taxed on freight earned, but Indian ships are tax label for freight.

6. Cargo Support: The cargo support has decreased because of decanalisation of bulk commodities and improved offers from foreign flagships.

7. Non-classification of Shipping as an_ Infrastructure Industry: Even though this issue has been raised from time to time, the government has mostly ignored it.

8. The necessity of State Support to Shipping: Shipping is a dangerous and cyclical business. It necessitates a capital infusion in the form of debt and equity. Increased regulations and quick technology advancements have impacted the business.

9. High Manning Levels: The cost of manning in India remains high as compared to other developed maritime nations, and it continues to rise as wages, salaries, and incentives rise.

Q2. (b) What is Maritime Fraud? State the various factors that lead to commitment of

maritime frauds. (10+10)

Ans) Maritime fraud can happen anywhere: on a ship, at a shipping business office, or in a trading company that transports commodities by sea. The list goes on and on. It must necessarily include two or more parties, one or more of whom must have obtained goods or services from another party in an unjust or illegal manner. Because they can occur anywhere, it is critical that seafarers exercise extreme caution and avoid becoming directly or indirectly involved in activities or being pressured by senior officials into wrongdoings that can cost them dearly in terms of both money and reputation.

The International Maritime Bureau, or IMB, was established in 1981 as a specialised subsidiary of the International Chamber of Commerce to investigate, inform, and battle such maritime scams (ICC). It is a charitable organisation. Even the International Maritime Organization (IMO), in its resolution A 504(XII) (5) and (9) adopted on November 20, 1981, urged governments, organisations, and interested parties to work together and share information to prevent maritime fraud around the world. Hopefully, seafarers are already aware of the International Maritime Bureau's (IMB) piracy reporting centre in Malaysia and receive regular global piracy reports on board. Visit icc-ccs.org for additional information.

Some of these maritime frauds are obvious and easy to spot, while others may go undetected for a long time due to a lack of proof. On board, for example, the ones that are plainly apparent are:

1. Master and / or Chief steward manipulating stores and victualling invoices by signing for unreceived goods and sharing the loot with the supplier.

2. Senior deck officer(s) and / or ship’s crew selling ship stores or cargo.

3. Senior ship engineer(s) selling bunkers by signing for more and receiving less on their ships and manipulating the shortage through cargo residues(diesel) on oil tankers.

4. Senior ship engineers agreeing to accept substandard machinery spares.

5. Senior deck officers manipulating B/L figures

6. Ship superintendents acting alone or in liaison with senior deck officers inflating invoices with stores / spares and/or repair work not carried out in repair yards.

7. Cargo surveyors in liaison with senior deck officers, manipulating daily outturn figs to boost their ratings. This is most common on bulk carriers.

8. Agents, stevedores, suppliers, manipulating invoices in liaison with senior officers on board.

9. Ship manning agents manipulating salaries of the ship crew.

10. Ship manning agents supplying uncertified crew on board for less salary, by using fake certificates, CDC etc.

11. Senior officers on board manipulating Oil record book figures to hide deficiency in ship machinery and pumping residues overboard through portable hoses.

12. Senior deck officers manipulating cargo figures on oil tankers and pumping residues(diesel) to bunker tanks in liaison with ship owner, managers.

13. Ship’s crew and/or Master illegally carrying stowaways intentionally.

14. Ship’s crew and/or Master carrying contraband on board.

15. Insurance frauds committed by ship owners/Managers by manipulating ship records in liaison with ship officers and Master, which may include death on board (Homicides shown as suicides)

As a result, seafarers should stay attentive and watchful, and report any additional similar frauds not mentioned in this article to the port authorities. Whistle-blowers are being paid handsomely, like in the example of a 3rd Engineer who supplied strong proof to the US Coast Guard many years ago of wrongdoings by a chief engineer resulting in environmental damage. While the Chief engineer received a lengthy prison sentence, the junior engineer received a million dollars and US citizenship.

Q3. Briefly comment on the following:

Q3. a) “Objectives and policies for functioning of the supply chain are usually in

conflict both within and across operational units.”

Ans) The goals of manufacturing, marketing, sales, and distribution are frequently at odds with one another. To achieve a balance, the following cross-functional considerations must be considered:

1. Sales and marketing strategies, demand characteristics

2. Inventory management, procurement and manufacturing strategies, lead time (administrative and suppliers)

3. Product strategy, changes in demand and trends.

Because logistics strategies are negotiable, it is necessary to evaluate all these factors together to achieve the overall objectives of the logistics system. The systems must be interconnected horizontally and vertically across functions. It is the integration of organisational aspects on both a vertical and horizontal level that is known as a holistic approach to integration. A wide range of cross-functional systems/subsystems, such as manufacturing, procurement, inventory, sales, demand/sales forecasting, and analysis, are integrated as part of the horizontal integration process. Vertical integration is the process of integrating the operational, tactical, and strategic levels to facilitate quick decision-making.

Q3. b) “The world economic situation and the world trade are very closely related.”

Ans) Global maritime trade continued to grow until 1996, when total cargo tonnage reached a record high of 4.76 billion tonnes worldwide.

In 1996, the observed growth rate was 2.3 percent, which was the smallest rate recorded since 1985. Compared to the previous year, shipping services had just a slight growth (1 percent) throughout the year 1996.

Since seaborne trade is intimately tied to swings in global economic conditions, the recessionary tendency in the economy was the primary cause. The seaborne trade industry is extremely vulnerable to changes in global economic conditions.

In their projection for the following decade, the World Sea Trade Services (WSTS) predicted a rise in overall tonnage of 3.9 percent (4.9 percent for tankers and 1.6 percent for dry bulk cargo) over the previous decade (2006).

By 2006, it is estimated that containerized and other general freight will account for 6.6 percent of total cargo volume. The transfer of oil bases to non-OPEC sources, which resulted in changes in trade routes, resulted in only a slight increase (1 percent) in demand for crude oil over the period under review.

The demand for oil products increased by 3.1 percent in 1996 as compared to the previous year. Dry bulk cargo declined by 1.3 percent overall, with coal, iron ore, and grains all seeing decreases.

Oil tankers, bulk carriers, general cargo carriers, container ships, and other types of specialty ships such as LPG carriers, chemical carriers, ferries, and other passenger ships are all part of the World Fleet.

Q3. c) “Shippers-Ship owners consultation arrangements in India leave much scope for Improvement.”

Ans) The shippers-shipowners consultation process in India has a lot of room for improvement. Considering the following considerations, this is correct:

There has been a finding that the consulting arrangements are lacking in terms of secretarial personnel and meeting space. These organisations rely heavily on chambers of commerce for meeting space and personnel.

1. The inability to arrange seminars, conferences, and workshops to raise awareness is a result of a lack of necessary resources.

2. Because not all shippers are represented by an association, negotiations and conclusions represent only a portion of the consultation process.

3. The association does not have a representative on the Board of Trustees of the Port Authority of New York.

4. They do not have the necessary skills to present the situations in a scientific and objective manner. Shippers and the Chamber of Commerce have taken the initiative in contacting government officials.

5. This has a negative impact on the growth and reputation of associations.

Q3. d) The rate of return from warehousing business is low and the gestation period is rather long. (4X5)

Ans) A poor rate of return (ROR) is achieved in the warehousing company, and the gestation time is relatively lengthy. Warehousing involves several strategic decisions, including the number of warehouses to be built, the capacity of those buildings, their location, and the kind of ownership (leased or owned). These entail significant financial outlays.

A warehouse is responsible for a variety of tasks such as inventory management, storage of goods, and so on. These begin to generate money more than the initial outlay when the warehouse changes for each consignment held over the course of a given amount of time. The cost of owning a warehouse includes the purchase price as well as the cost of financing the purchase price. A similar scenario is that having additional warehouses might result in greater customer service, but this would entail increased ownership and maintenance costs.

When the distribution system makes a product available in the location where it is needed and when it is needed, the product gains both time and place utilities, hence increasing its utility. To accomplish this, the corporation must make crucial decisions regarding the number of warehouses to be built and the sort of transportation system to be employed for product distribution.

Q4. Distinguish between the following:

Q4. a) Domestic logistics and international logistics

Ans) Logistic is a fantastic way to carry goods both within and outside of your country. In every alley across Australia, logistics companies are sprouting. Understanding how logistic is crucial in our daily lives will help you in the long run, whether you're in business or not. Domestic and foreign logistic services can be widely defined. It's easy to confuse these two based on their names, but this isn't the case when it comes to their functional spheres.

The Basic Line:

Domestic logistics refers to the distribution of commodities within your country, whereas international logistics refers to the delivery of goods beyond national borders. Because of the proximity involved in the process, dealing with domestic transportation is vastly different than dealing with foreign transportation. Let's have a look at the fundamental differences between these two operations.

Management:

You can book a local freight transport service in a variety of ways. Metro transportation, complete truckload delivery, and risky products point-to-point delivery to down the road or to another area of Australia can all be done in a day or a week. International logistics, on the other hand, necessitates a distinct set of commercial operational managers who will devise a comprehensive plan for delivery overseas.

Costs:

Both processes have expenses that should be considered separately. The cost varies depending on the route of conveyance, technology, and labour involved. International transactions are subject to additional taxes, making them more expensive than domestic transactions.

Transportation:

When transporting within your country's borders, you'll have a variety of options, including trucks, metros, and other road transportation solutions that are intended for palletized, forklifted, and skidded loads. When travelling outside of a country's borders, however, your options are severely constrained.

Q4. b) Inland container depots and Container fright stations

Ans) The most significant distinctions between an ICD and a CFS are as follows:

Inland Container Depot (ICD):

1. An ICD is a customs station that the loaders use for loading and unloading cargo.

2. ICD helps importers/exporters to handle their cargo shipments closer to factories and warehouses and have an independent existence.

3. ICD is usually far away from the servicing points.

Bills of entry, shipping bills, and other documentation are carried out at the ICDs. The shippers also use them for the assessment and clearance of goods, warehousing, temporary storage, etc.

Container Freight Shipping (CFS):

1. Essentially, a CFS is an extension of the port-terminal itself that may be customised.

2. CFS is an integral part of the customs station and does not operate in a separate legal capacity.

3. CFS is primarily located closer to the seaports.

The CFS is only responsible for a portion of the customs process, namely the investigation of products. The shippers load and unload the cargo onto and from the CFS's cargo units on a regular basis.

Q4. c) Weight ton and Measurement ton.

Ans) It is possible to express the rates of individual commodities in different ways, including per weight tonne (W), per measurement tonne (M), and per weight tonne or measurement tonne (W/M), depending on which provides the highest revenue.)

Tariffs are calculated using gross weight (also known as weight tonnage), which is denoted by the letter "W." It is based on volume, i.e., the measurement tonne, which is denoted in the tariff by the letter "M."

Different bases can have a different unit of measurement than one another.

For example, a weight tonne is typically defined as either a metric tonne (100 kg) or a long tonne (1,016 kg), and a measurement tonne is typically defined as 40 cu. feet in certain trades, 50 cu. feet in others, or else 1 cu. metre, which is 35.5 cu. feet in today's standard practise.

A commodity that is being charged on a weight basis will pay according to its weight regardless of the volume it occupies, and a commodity that is being charged on a volume basis will pay according to the volume it occupies regardless of its weight. This is standard practise in the commodity industry.

Q4. d) Reorder Level (ROL) and Reorder Quantity (ROQ) (4X5)

Ans) Reorder Level

Re-Order Level (ROL) implies the material level at which purchase requisition is generated for a fresh supply of material. When the stock on hand, approaches the reorder point, the storekeeper takes action to replenish the exhausted stock. So, the difference between reorder level and minimum level will be adequate to meet the production requirement till the fresh supply is received.

Re-Order level represents the level of material lying between the minimum and maximum stock level, in essence, that before the stock of material ordered is delivered by the supplier and received into the stores, enough material should be there to cover both normal as well as abnormal consumption situation. If the firm has an idea about the lead time, EOQ, and consumption pattern, Reorder level can be determined easily.

Reorder Quantity

Re-Order Quantity (ROQ) implies the size of the material lot, for which purchase requisition is prepared by the company’s stores department

On the contrary, Re-Order Quantity (ROQ) represents the size of the order, which is going to be placed by the entity with the selected supplier when the stock level touches reorder level. For this purpose, the determination of optimum and reasonable order size is substantial.

This written account will help you understand the major differences between re-order level and re-order quantity.

Q5. Write short notes on following:

Q5. a) Public Warehouse.

Ans) A public warehouse is a huge warehouse where businesses can rent storage and fulfilment space. The warehouse normally rents space based on the quantity of square footage occupied by the product, and fulfilment services are supplied for a fee. Agreements and SLAs will differ from one warehouse to the next and may include minimum average order volume (AOV) standards or higher storage charges for slow-moving inventory.

The key benefits of public warehouses include:

1. Lower costs: SMBs may instantly begin stocking skuas and shipping to consumers without having to invest the funds, resources, or time required to run and maintain their own specialised warehouses.

2. Scalability: As a firm grows, retailers can use inventory forecasting to expand shelf space and negotiate new SLAs as needed. When it's time to scale up, public warehouse providers should be able to accommodate — and even predict — with the correct Warehouse Management System.

3. Flexibility: Public warehouses frequently provide month-to-month leases, which, when combined with a nationwide network of warehouses, can allow SMBs to transfer skua in accordance with geographic demand.

4. Strategic Locations: SMBs can now strategically select public warehouse locations that provide 2-day delivery thanks to the growth of ecommerce. Most SMBs can ship in 1-2 days to 95-99% of the US without sacrificing margins provided they have the correct data and warehousing alternatives.

Q5. b) Commercial Shipping

Ans) It is the business component of the Maritime Industry, and it is referred to as commercial shipping. When we speak of commercial shipping, we are referring to the experts who are active on land in the processes of import-export trade and logistics. Many employees on land work in offices to care after the business and ensure that it runs well. These people include ship brokers, ship charterers, port managers and port agents, ship managers and crew supervisors, vessel operators and commodity merchants, among many others.

Q5. c) Multi-Modal Transport Document

Ans) A document issued or signed by a carrier that indicates that a shipment will be transported by more than one mode of transportation. Typical multimodal transport documents for a door-to-port shipment with main carriage by vessel might specify pickup at the point of origin (often the seller's premises), pre-carriage by truck, and main carriage from the named port of loading to the named port of discharge by a named vessel.

Typical multimodal transport documents are available online at www.multimodaltransport.com. If the contact carriage was properly drafted, the document could be issued either on a received for shipment basis at any time after the goods passed through the control of the main carrier or on an on-board basis after the goods were loaded onto the named vessel, depending on how the document was drafted. Given the fact that certain cruise lines will only assume obligation for cargo while it is on their vessel, it is critical to thoroughly review the contract of carriage.

Q5. d) Privatisation of Ports (4X5)

Ans) Recently, a substantial number of countries have established policies targeted at modernising their port infrastructure. Privatization has frequently been a key component of such plans, with the hope that it will increase efficiency and decrease the tremendous financial burden placed on governments that strive to sustain such a capital-intensive industry.

One of the most persuasive arguments in favour of privatisation is that the transfer of ownership from public to private hands will, in the long run, result in an increase in economic efficiency and, consequently, an improvement in financial and operational performance. It is the purpose of this paper to investigate the theoretical foundations and practical validity of this claim, and to conclude that privatisation is only a partial cure for what ails the world's ports, and that, if implemented in isolation, it will not be able to provide the much-needed panacea for the industry's problems.